In Latvia two investments in energy source technology, using natural gas fired high efficiency boilers and
small co-generation unit system, have been made hereby archiving a significant reduction of the emission of
greenhouse gasses. The small scale cogeneration plants supply heat to the public district heating networks.
The production facilities will also produce electricity for sales to Latvenergo.

B.3.1.1 General description: Adazi

The system is located in a building and it comprises one co-generator and two boilers. By means of a heat
exchanger the heat is transferred into the district-heating network. The thermal power will be at least 3.6
Mw. The co-generator produces electrical power with a maximum of 350 kW. This electricity is delivered to
the grid of Latvenergo. The thermal capacity of the co-generator is about 2 GJ / hr.

The co-generator is designed for ease of access and maintenance. It consist of the following parts:

Gas engine. The gas engine complies with the current standards of emission, NOx emission
less than 140g/Gj.

Generator: a brushless three phase generator supplied with a cos-phi controller current transformer in
the terminal cabinet.

The boilers have a capacity of 1725 kW each. The chimney is designed on a basis of 10 % CO2.

The system produces heat for the district heating network of Adazi. The produces electricity is delivered
to Latvenergo. In case the circulation pumps of the heating network fail due to a black out, the
co-generator will supply electricity to them. The system will be monitored by means of a telemetry system,
which uses a telephone line.

B.3.1.2 General description: Lielvarda

The system is located in two containers, one comprises one co-generator and the other contains the two
boilers. By means of a heat exchanger the heat is transferred into the district- heating network.

The contractual thermal output is 1.6 MW. The co-generator produces electrical power with a maximum output
of 165 kW. This electricity is delivered to the grid of Latvenergo. The thermal capacity of the
co-generator is 270kW.

The co-generator Zantec 165 is constructed in modular units on a special frame designed for ease of access
and maintenance. It consists of the following parts:

Gas engine type MAN. This gas engine complies with the current standards of emission, NOx
emission less than 140g/ GJ.

Generator: Brushless Stamford three phase generators supplied with a cos-phi controller current
transformer in the terminal cabinet.

Viessmann in Germany manufactures the boilers. These are two Paromat duplex boilers each with a capacity of
740 kW.

The system produces both heat and electricity. In case the circulation pumps of the heating network do not
function due to absence of electrical power, the co-generator will supply electricity to these pumps.

The system will be monitored by means of a telemetry system using a telephone line.

B.3.2 Type of activity

The general direction of pilot phase activities of AIJ in Latvia comprises the following four types of
projects:

Use of renewable energy sources - wind energy as well as biomass;

Environmentally adapted fuel use as energy resources by installation of small scale CHP;

Energy efficiency projects in distribution side by rehabilitation of district heating systems;

Energy efficiency improvement in end-users side by regulation of heat energy consumption and renovation
of buildings.

The measures for energy efficiency improvement according with The Law on Energy of Latvia was focused on
more effective technologies, fossil fuels replacing and switching and installation of small-scale
co-generation systems. Parliament of Latvia corrected and accepted changes (no more double tariff of
electricity generated in small scale cogeneration) in Law on Energy.in May 2001.

Adazi, the plant is located in Adazi Municipality, about 20 km southward from Riga, in Latvia

Lielvarde, the plant is located in Lievarde Municipality about 50 km south east from Riga, in Latvia

B.3.4 Stage of activity (please underline the appropriate option)

Pre-feasibility study completed

Feasibility study completed

In start-up or construction phase (e.g. ensuring financing, construction of site, purchase of land,
installation of new equipment)

In operation (e.g. new windmill plant is connected, converted boiler reconnected, etc. and
real, measurable and long-term GHG emission reductions or removals by sinks are generated)

Completed (AIJ project activity no longer generates GHG reductions or removals by sinks or has been
terminated)

Suspended (Please indicate date when AIJ project activity is expected to resume, and give brief
explanation of reasons for suspension (up to half a page)):

B.3.5 Lifetime

Approval date:

Adazi: 2. June 1995

Lielvarde: 2 June 1995

Starting date (installation):

Adazi: October 1996

Lielvarde: November 1998

Ending date of installation(expected):

Adazi: October 1997

Lielvarde: November 1997

Ending date of installation (actual):

Adazi: October 1997

Lielvarde: November 1997

Operational ending date:

Adazi: 2013

Lielvarde: 2013

Reasons for the choice of lifetime dates (Describe briefly (up to half a page)):

The investments required in any cogeneration system are quite considerable and, to justify the expenditure,
it should have a fairly long operating life, between 10 and 25 years. As predicting the power and heat
needs of any site over long periods is quite difficult, the feasibility of most projects is calculated over
a shorter period, such as ten years.

Past experiences demonstrate that co-generation systems based on gas engines (as Adazi and Lielvarda) are
very reliable when operated with properly planned maintenance. An availability of 95 % is considered
realistic.

Major overhaul time is between 25,000 and 30,000 running hours for medium speed units (750 - 1,000 rpm).

With current operations being from 5,000 to 7,000 hours/year, service lifetime could be estimated between
10 and 15 years.

B.4 Determination of the baseline

B.4.1 Date of completing the baseline determination: May, 2001

B.4.2 Carried out by (name): Dagnija Blumberga

(please provide detailed contact information in annex 1)

B.4.3 Type of baseline methodology applied and described in detail in section E.1

(please underline the appropriate option(s))

Project-specified by:

- Simulating a likely situation that would have existed without the project
(0-alt)

- Taking an actual reference case project

- Other (Please specify (insert lines as needed)):

Multi-project by using (please specify briefly):

B.4.4 Project boundary: degree of aggregation (Please underline)

Global

National

Sectorial (please specify)

Project

Other (please specify)

General compatibility with and supportiveness of national economic development and socio-economic and
environmental priorities and strategies

According to Latvian Energy National Programme in order to determine schedule of new power plant
commissioning that fits within the national economy’s framework, feasibility of individual plants was
analyzed based on the following criteria:

projections of fuel prices;

projections of imported electricity prices;

projections of thermal energy prices;

investment requirements and available financing sources.

Plant feasibility analysis for Adzi and Lielvarde was carried out taking into account that, besides the
plant’s electricity costs that could be hedged against imported electricity prices or other supply
alternatives, construction of new facilities will:

reduce losses in transmission and distribution, as plants are located closer to power consumption
centers;

increase the systems reliability and reduce dependence on electricity imports;

Reliability in regard to energy supplies in Latvia’s circumstances was considered as an important
factor.

Analysis indicates that construction of combined heat and power plants is technically and financially
feasible in Adazi and Lielvarde, where thermal load is sufficiently dense and the pipeline networks are
extensively developed. In this case CHPs would provide for:

substantially better fuel utilization

simultaneous heat and power generation

urban environment improvement (as CHP construction would be connected with closing of a number of
small, inefficient and environmentally harmful boiler plants).

Adazi and Lielvarda use natural gas as fuel. JSC Latvijas Gaze magisterial pipelines are linked with the
gas supply systems of Russia, Byelorussia, Estonia and Lithuania. Supply with gas is regulated by the
state; stability of deliveries is sufficiently high because of the possibility to store natural gas
reserves in Incukalns gas storage site.

Partly due to the lack of clear legislation the installation of co-generation plants funded by the local
government, private and foreign capital is delayed and so is the replacement of regional boiler houses with
co-generation stations. This process should get stabilized with the adoption and implementation of the Law
on Energy and Regulations No. 425 of the Cabinet of Ministers (October 31, 1998): "On the procedure of
purchase of the surplus electrical energy generated by the co-generation stations"

Baltic sea region small scale CHP action started in summer 1998. Latvian representatives together with
specialists from Lithuania, Estonia, Denmark, Sweden, Finland, Norway, Poland and Germany are involved.
This action is led by Danish Energy Agency by support from EC DGXVII.

Environmental, economic and social and cultural impacts

D.1 Environmental impact (positive and / or negative)

The demand for improved environmental performance in power generation is a powerful pressure for the
increased use of co-generation techniques. However, it is often quite difficult to calculate the actual
cost benefits accruing from improved environmental performance, since it is difficult to evaluate in
terms of money environmental impacts.

Co-generation has the potential to significantly reduce the national quantity of fossil fuel burnt and,
as fossil fuel consumption is reduced, the national emission of harmful greenhouse gases is also
reduced.

It is estimated that, where co-generation replaces the separate production of heat and electricity,
carbon dioxide savings between 132 and 642 kilograms per 1 MWh of electricity can be achieved. However,
savings are more likely to average around 300 kilograms per MWh. Therefore, the strategy of promoting
co-generation as a way of reducing emissions of carbon dioxide as a step towards achieving the Kyoto
targets for greenhouse gas reduction is very important.

The Carbon Dioxide reduction achieved by Adazi and Lielvarda are shown later in this report

However, it is not just carbon dioxide production that is affected by the switch from conventional
power and heat generation to co-generation. If the conversion to co-generation includes a fuel switch
to natural gas (from a solid fuel for istance) it is possible to make significant reductions in other
harmful emissions like dust, particulate, SO2 and NOx.

Finally CHPs yield as well as an improvement to the landscape, due to lower stacks

D.2 Economic impact (positive and / or negative)

Co-generation can reduce the cost of generating electricity for the consumer and it reduces energy
dependence on electricity imports.

Straightly connected to the CHP plants of Adazi and Lielvarde is the positive economical effect to the
municipalities, indeed they are able to invest more in district existing network.

Furthermore a positive economical impact turn from the reduction of the electrical energy losses in the
electrical networks.

D.3 Social and cultural impact (positive and / or negative)

The green issues are rapidly growing in importance and they represent a significant parameter for
evaluating the development level of a country. The environmental pressure to install co-generation
system is increasing steadily. The society has a good feeling when are proposed initiatives that
involve environment concerns, economic benefits and health safeguard. CHP technologies reflect all the
above-mentioned points.

Anyway at the moment do not exist quantitative date for evaluation of social benefits and cultural
impact due to either Adazi or Lielvarde CHP’s.

Calculation of real, measurable and long-term environmental benefits related to the mitigation of
climate change, that would not have occurred otherwise

E.1Assumptions and characteristics of the baseline

E 1.1 Adazi

Calculation of baseline for Adazi has been realized for three components as follows:

CO2 emissions from electricity supply from CHP-1, tCO2 /MWh el cons;

CO2 emissions from thermal energy generation from CHP-1, tCO2/MWh th;

CO2 emissions from thermal energy from old boiler house in Adazi, tCO2/MWh th.

E 1.1 Lielvarde

Calculation of baseline for Lielvarde has been realized for three components as follows:

CO2 emissions from electricity supply from CHP-1, tCO2 /MWh el cons;

CO2 emissions from thermal energy generation from CHP-1, tCO2/MWh th;

CO2 emissions from thermal energy from old boiler house in Lielvarde, tCO2/MWh
th.

E.1.1 Assumptions of the baseline and its project boundary:

Calculations are based on following assumptions:

1. Electricity produced in small scale CHP replace electricity production in Riga CHP –1, where
boiler fuelled by peat and steam turbine are used. Riga CHP –1 represents the most expensive
electricity produced. This assumption is based on following:

Energy generation in Riga CHP – 1 had lower efficiency (77%);

electricity generated in Riga CHP – 1 was more expensive in comparison with other sources and
import.

2. Thermal energy produced in small scale CHP replace heat energy production generated in Riga CHP
–1, by means of boiler fuelled by peat and steam turbine, according to ratio electricity/thermal
energy, because electricity production in Riga CHP –1.

3. Thermal energy produced by boilers in small scale CHP is replace thermal energy generation in old boiler
house in Adazi (fuelled natural gas with efficiency 80%) or in old boiler house in Lielvarde (fuelled by
Light Oil).

4. Electricity production and losses in networks are taken into account by calculations and use of total
efficiency of electrical system and use of specific indicator – GHG emissions related to electricity
supplied to consumers tCO2/ GWh el.cons.

E.1.2 Describe the baseline

(please describe the baseline as well as effects occurring outside the project boundary (up to 1 page)):

E.1.2.1.

1. Energy efficiency of

CHP –1 77%

2. Electrical energy losses in electrical networks 21%

3. Data about electricity production

Data for assumptions are collected from Annual Reports of Latvenergo and Statistical Data from Reports of
Ministry of Economy of Republic of Latvia "Economic Development of Latvia".

E.1.3 Reasons for selecting a baseline and its methodology

(Describe (up to 1 page)):

Letter of Intent signed in 1995. Baseline for calculations is selected on year 1995.

Please describe the baseline as well as effects occurring outside the project boundary (up to 1 page):

E 3.2.1 Baseline

The year 1995 has been chosen as the baseline because it corresponds with the approval date of the
projects: Letter of Intent was signed. As baseline has been taken electricity and thermal energy (according
to ratio electricity/thermal energy) produced into account Riga CHP-1 call TEC-1.

From CHP-1 has been calculated two coefficients as follows:

CO2 emissions from electricity, 0,484 tCO2/MWh el cons;

CO2 emissions from thermal energy, 0,382 tCO2/MWh th;

Thermal energy produced in boilers in Adazi and Lielvarde has been calculated from the substituted boiler
houses of Adazi and Lielvarde:

CO2 emissions from thermal energy from old boiler house in Adazi, 0,263 tCO2/MWh
th

CO2 emissions from thermal energy from old boiler house in Lielvarde, 0,351
tCO2/MWh th

Using these coefficients and the available date from the SSCHP in Adazi and Lielvarde about generated heat
and electricity consumption the baseline has been formulated.

E 3.2.2Effect occurring outside

The projects in Adazi and Lielvarde benefit the Latvian economy and environment by investments in clean
technology and technology transfer.

The introduction of new and efficient technologies, as small scale CHP plants, represent a wave of
innovation for Latvia and aperture toward to sustainable energy use; therefore these projects have the
effect of transferring knowledge and technology in Latvia, related to introduction of modern energy
production systems.

The environment benefit from the use of efficient gas technology, since the national emission are reduced.
Also the landscape is improved due the to lower stacks.

Under an economical point of view the projects of Adazi and Lielvarde will prevent difficulties those
create market obstacles for future penetration of small scale co-generation in Latvia.

The introduction of CHPs benefit as well as the consumers expenses, whereas the prime cost upon both hot
water and electricity furniture are decreased. Moreover a regular and stable delivery of heat and hot tap
water for Adazi and Lielvarde citizens is guaranteed.

E.3.3 Please explain why the AIJ project activity would not have taken place anyway

(Describe (up to 1 page)):

If not AIJ then would the project would have been carry out from someone else?

Adazi could change boilers with higher efficiency after three or five years.

Lielvarde could continue operation of boiler house fuelled by light oil

Summarize briefly the key elements of the monitoring plan (i.e. which parameters are being monitored,
with what frequency, providing sampling intensities if appropriate, methods and equipment; associated
uncertainties, etc.) (not more than 1 page):

Monitoring of following data:

hourly fuel consumption

specially planned measurements of components of exhaust gases.

Is the monitoring conducted by project proponents? (Please underline): Yes / No

If no, which organization(s) is/are involved: Kindly indicate the type of organization(s): consultancy,
accredited certification body, government body, university etc. and provide their detailed contact
information in annex 1 to this report:

E.6.3 Verification

Is the activity subject to independent verification (Please underline): Yes / No

If yes, what organization(s) is/are involved: Please indicate the type of organization(s) (consultancy,
accredited certification body, government body, university, etc.), and provide their detailed contact
information in annex 1 to this report. Indicate the frequency of the assessments, how many assessments have
taken place to date, and whether the assessment report(s) is/are publicly available if requested.

Accredited certification body : Price Waterhouse

Summarize briefly the key elements of the verification activities: (Please describe issues such as
criteria used; the project design; project implementation; assessment of the baseline; key project
parameters being verified; the frequency of assessment/surveillance; sampling approach applied by the
assessing organization) (up to one page):

E.6.4 Certification

Certification is not a formal requirement under the AIJ pilot phase. If the project has made provisions for
third-party certification, please indicate the certification body and frequency of certification, and
attach copies of the certification agreement or protocol(s):

E.6.5 Other form of mutually agreed assessment procedure (please specify):

Describe the procedures, including name of organizations involveda):

Company EKODOMA is assigned for the data collection and evaluation of the climate effects of this
project. After an initial work in cooperation with EDON DURZAAM assigned consultant, this local
organization would take the main responsibility the continued measuring for JI-reporting.

Note: The financing of AIJ shall be additional to financial obligations of Parties included in Annex
II to the Convention within the framework of the financial mechanism, as well as to current official
development assistance (ODA) flows (decision 5/CP.1). Please explain additionality in the context of this
project (up to half a page).

Contribution to capacity-building and the transfer of environmentally sound technologies and
know-how

Note: Developed country Parties shall support the development and enhancement of endogenous capacities and
technologies of developing country Parties in order to enable them to implement the provisions of the
convention.

G.1 Identification of environmentally sound technology and know-how

Name of manufacturer: different manufacturers

Place of manufacture (country): the Netherlands

Model names and numbers of equipment (where appropriate):

Any other relevant key specific technology characteristics:

Where applicable, name and location of provider and nature of training:

G.2 Characteristics of environmentally sound technology

The technology is (underline the option):

At a research and development stage

Being tested or demonstrated in similar conditions outside the host country

At the initial stage of introduction into the world market

At the initial stage of introduction into the host market

Commercially available and deployed in the world market

Commercially available and deployed in the host market

Not characterized by the above options. Please describe:

G.3 Impact of the AIJ project on capacity-building and transfer of environmentally sound technology and
know-how (up to two pages):

Small scale cogeneration plants in Adazi and Lielvarde started introduction with new technologies for
electricity and thermal energy production. Two pilot CHPs in Latvia has involved and influenced actors from
different levels: